MOSCOW, March 24 Russia will export more oil to
Europe in April than it has in any month since 2013 - despite
Moscow's plan to sign a global agreement on freezing production
in a bid to lift the price of crude.

The fact Russian exports are rising illustrates how hard it
will be to enforce the deal, due to be finalised on April 17 in
Qatar, and shows the potential for countries to use loopholes to
keep exporting crude, blunting the intended impact on prices.

Russia can raise exports while keeping production flat by
re-routing some oil away from refineries and into exports.
Moscow says the freeze covers production, not sales abroad.

The International Energy Agency said on Wednesday the deal
may be meaningless. Iran and Libya have said they
will not participate, at least for now, and they plan to raise
production.

Nigeria, the top oil producer in Africa, has said it expects
oil exporters to agree a supply freeze in Doha next month but
that it plans to boost its own output.

The increase in Russian exports is mainly because of planned
maintenance at refineries that reduced their capacity to process
crude. It also reflects Russia's economic slump, which has
reduced domestic demand for refined products.

But another factor, according to one trader, is a desire by
Russian producers to protect their share of the crude oil market
in Europe, where Russia's traditional dominance is under threat
from newly arriving Saudi supplies.

"Of course, no one said those markets belong to Mother
Russia. This is purely commercial trade," said the trader, who
spoke on condition of anonymity because he is not authorised to
talk to the media.

"But a marketplace is a marketplace, no one is going to give
it up."

EXPORTS NOT INCLUDED

Reports that members of the Organization of the Petroleum
Exporting Countries as well as non-OPEC producers were
discussing an output freeze have helped lift world oil prices
from glut-induced 12-year lows hit in January.

Asked what would be covered by the agreement, Russian Energy
Minister Alexander Novak told reporters: "The discussion is only
about freezing production. And not exports."

The high level of Russian oil exports next month was
confirmed to Reuters on Wednesday by export pipeline monopoly
Transneft.

According to the company, Russia is set to export 7 million
tonnes from Baltic Sea ports in April, the largest volume since
October 2013. That marks a 9 percent increase on the 6.41
million tonnes planned for export in March.

IDLE REFINERIES

According to Reuters calculations based on Energy Ministry
data, Russia will have as much as 4.3 million tonnes of idle
refining capacity next month, more than twice the 1.9 million
tonnes unused in March.

Russian refineries traditionally have the largest offline
capacity in April, as companies scramble to finish maintenance
before consumption of oil products peaks in summer.

This forces producers to divert crude towards exports,
because there is nowhere to store the oil that otherwise would
have gone to refineries.

When refineries come back on line, the glut in exports could
end.

However, not all of the offline capacity is down to
maintenance. Some is simply idle because the economics of the
oil industry make it more lucrative to export instead.

Oil traders' profit from selling at home and abroad varies
depending on demand. According to Reuters calculations, a trader
would last month have sold crude with a premium of around 500
roubles ($7.3) per tonne for export compared to a domestic sale.
URL-WSB-FRM-NM

Russia could, in theory, export even more crude, but that
would be limited by infrastructure constraints.

There is almost no spare capacity at the Black Sea port of
Novorossiisk, while the Druzhba pipeline, which connects Russia
to the northeast corner of the European Union, may take an
additional 200,000-400,000 tonnes only, traders say.

Next In Global Energy News

LIMA, Dec 9 An indigenous federation opposed to
a recently approved plan for oil drilling in the Peruvian Amazon
said on Friday that native communities will physically block any
attempt by oil companies to operate on their lands.

Trending Stories

Sponsored Topics

Reuters is the news and media division of Thomson Reuters. Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Learn more about Thomson Reuters products: